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I’d been following the stock market for years by the time I could finally invest on my own. It used to cost $50 a trade with a major broker, and the fees were cost prohibitive. I waited and waited for fees to decline. Instead of trading, I researched stocks and followed prices.

When companies like E*Trade and Ameritrade were born, they slashed trading fees to a manageable $10 to $15. Suddenly, investing became a tool for a greater population. I was a teenager when I made my first trades.

Actually buying and selling — pulling the trigger on a stock — took little of my time. Most of it was spent reviewing reports and books. I read like mad from economics and investing books.

For last 15 years, I’ve heard some comically bad advice. It’s flown in the face of everything I’ve read. Sometimes it’s senseless; at other times, dangerous. If you hear this “advice,” run.

1. Buy low and sell high

I’ve heard this unhelpful tidbit more times than I can count. Usually, it’s repeated by people who understand what the stock market is: a place to buy and sell. But they hardly understand the how.

To actually “buy low and sell high” is far more complicated. The cliché presumes you can spot a low point or “bottom,” have money ready to invest, and “call” the bottom by buying in. Unfortunately, this advice can also encourage people to look for “high” points or a market top or a bubble.

Few people — statistically speaking — can accurately call bottoms and tops. Even the most trained professionals fail over and over again. CNBC anchors, analysts, and commentators regularly preach markets as being oversold and/or overvalued, but rarely are their comments checked — veracity analyzed.

While the guidance is right, I call this bad advice because it doesn’t make you a better investor. Despite the intention, this statement doesn’t help you find lows and highs.

2. Penny stocks lead to significant returns

Amidst this culture of capitalism, get rich quick schemes are everywhere. The stock market, with it’s daily returns and losses, is something of a casino for the world. With one big trade, you could be rich; at least, that’s what might be sold to you with “penny stocks.”

Penny stocks are less than $1.00 and often traded on the OTCBB — an off-market, poorly regulated exchange for little-known companies. Online scammers and tricksters tell potential investors about their regular returns and successes.

Can you believe they made a 1000% gain in a week? They became a millionaire overnight!

They’ll tell you to invest in companies — with little capital needed — and get ready to profit big time. Unfortunately, there’s no reliable way to get rich quick. Penny stocks are a surefire way to lose money. Never listen to those who are swept up in the potential percentage gains of a company’s 50-cent shares.

3. Buy the upgrade, sell the downgrade

Stock analysts might be my least favorite market players. Their salaries and decisions are closely tied to major investment banks, which can lead to a bias in their decision making. Allow me to catalogue some of my concerns.

Firstly, their decisions immediately affect stock prices — regardless of the veracity of the claims.

Secondly, many analyst ratings are a buy — all the time. Regardless of market changes, being on the sell side isn’t rewarded within investment banking companies and predicting a negative downturn is inherently risky when the market tends to go up.

Thirdly, they frequently make positional shifts without lowering prices. For example, let’s say Netflix is 95.90 per share today. A stock analyst might downgrade their position to sell, but keep a $105 price target. So, as an average investor are you supposed to hold onto that position or sell it?!

For most investors, these recommendations don’t make much sense. And trading off of them is an acknowledgement of a “rational” market. But the markets are anything but rational. Emotions constantly affect market capitalizations, and these analyst ratings fail to capture passion.

In 2009, a powerful documentary came out called Collapse. The film interviewed a charismatic man named Michael Ruppert. He speaks emphatically about the concept of peak oil and how he alone predicted the market crash of 2008.

That’s right, Ruppert, of all men, predicted it all! And when the movie was published, most of the American public was convinced oil would forever escalate. It sat around $70 to $80, and would soon go to $100 per barrel. Ruppert was considered a genius.

His prediction was that the economy would collapse and we’d have to change our why of life — drastically.

But it never came. Instead, oil markets plummeted over the last seven years since the documentary, and Ruppert… well, he died by suicide in 2014.

Investors and abstainers frequently entertain these end of days ideas because it justifies wild investments in commodities or a wholesale avoidance of the stock market. Both decisions put portfolios in peril. Best to keep a moderate perspective and diversify your portfolio.

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Growing up in two market bubbles

I was 10 years old when the stock market entered an epic gurgle and burp. The technology bubble was well underway. As a child, I couldn’t help notice the daily papers’ coverage. Cisco, IBM, and Microsoft were going to stun the world, and a wealth of startups were making groundbreaking achievements through the Internet. Stores were moving online — people could buy stuff from their couches. And the market loved it.

Then it all came crashing down. Without profits and expected cash flow, companies petered out. They couldn’t sustain their losses, and the market was late to the realization. Nonetheless, as soon as people began selling the tech sector, stocks were doomed. The NASDAQ collapsed over a one-year period. While some had benefited from the meteoric rise, many failed. They chased moneyed dreams. The market had become a ponzi scheme of sorts, and the burst annihilated portfolios.

Average Joe’s and Jane’s across the world were affected. Money disappeared from pensions, IRAs, 401ks, and regular old investment accounts. Suddenly, people’s spending reduced — sour from massive losses and concerned about financial futures. People cut back because their ability to save and earn was jeopardized.

Putting the past behind us

Over time, these booms and busts are held in reverence. Ah, remember the market crash of 1999-2000? How about Black Monday? Oh, and how about the Great Recession of 2007 to 2009? Those were the days, right?

We try to put these events behind us and focus on the future. Some may say, “We’re long past those idiotic dreams and bubbles. We know better now.” We treat these as abnormalities — one-off events. The mavens repeat their mantras to calm the masses: “Timing is your friend. The market will recover.” But we never fix the underlying, systemic problems; thus, the cycle continues: boom and bust after boom and bust.

Wallets eventually open again. The economy eventually “bounces back.” In time, market optimism returns because consumer discretionary spending increases. Stocks get bid up again. And while we hope another bubble never returns and convince ourselves that a lesson was learned, something in us remains. We are still humans — the ones who caused the bubble in the first place.

That mentality to save every penny in crises fades like the hangover of a party best forgotten. We get excited again, and invest in financial instruments that some “guru” recommends that make little sense to us. We convince ourselves that we know better than to fall into some scam or trap. Eventually, the price of stocks becomes too expensive to sustain their momentum — for whatever the reason — and the roller coaster plummets.

Boom and bust cycles are everywhere

Even beyond the stock market, various points in history talk about cutting back and saving. For instance, the entire country rationed gasoline, coffee, and other necessities for those in combat during World War II. Our sacrifices would win the war. Our rationing would help others in need. And our country helped us collectively achieve this goal. These were frugal times. But after World War II ended, the country entered one of the largest economic growth spurts of all time. Production was enormous and the largest generation followed: the Baby Boomers.

More recently, an epic drought has swept over California. Crops are unable to grow and farmers are being asked to cut back on water usage. Without rain and irrigation, this might be one of the worst seasons for the West coast. Every time you look at the map of California it’s bright red for “exceptional drought.” There isn’t another level dryer, unless we’re forced to create it.

This exceptional drought has led to more brush and forest fires. People and their homes have been threatened. The state has fought bravely against these disasters, and many are pitching in to conserve and ration their precious water. Smartphone apps have been created to rat out neighbors who are using more than necessary. Residents are being asked to let their lawns brown. Certain crops and foods (i.e., almonds) are being targeted because of their excessive water needs.

The city of glitz and glamour, Los Angeles, has been a focal point for conservation. Rivers are non-existent and the heat bakes the surface. Many celebrities have extolled the value of cutting back, too. But everyone is wondering whether California will be able to weather this drought. What if the rains never return in full force? What if the land stays perpetually scorched? How long could this exceptional drought really last?

At many points in history we’ve done well rationing, scrimping and saving amidst tragedy. We come together and embrace each other as humans. We work together to move beyond struggle. And we ultimately have overcome every major concern we’ve ever faced. But over time, humanity has a painfully ironic inability to hold back and resist the urge to spend and splurge. We seem to perpetuate feast or famine — unable to live in moderation and within means. If history repeats itself (and it does), then we will likely see California boom again if the rains return. People will resume their previous water usage and restaurants will once again drop off full glasses of water without asking first.

Five ways to weather any storm

From the stock markets to droughts to wars, the booms and busts are everywhere. If we admit that we have a cyclical problem, the question becomes, What can we do about it? The following are five rules to follow a middle path in times of tragedy and prosperity:

1. Create a rationed budget

At the heart of saving more and spending less is a good budget, but what if you lopped off $100, $200, $300, or more each month? What if you pretended that the money was gone? In modelling the potential new budget during a tragedy or bust cycle, you can see the depths of your budget. If all else failed and suddenly made less each month, how would your spending change? How would your savings change? How would you cut back? The essential aspect to this thought experiment is actually going forth with it. Enact the rationed budget and see how low you could go. Pretend that the crisis is here, and save for better times. Then, if a problem occurs, you’ll follow a path of moderation.

2. Spending shouldn’t change based on market optimism

It’s easy to get swept away in the good times. People buy enormous houses, $1 million vehicles, and gigantic yachts when the market is doing well. Success looks like materials, so people buy in. To weather storms, spending cannot cave to market swings. Consistency is key. When others start buying wildly and race to the top, you should be thinking about where you’re spending too much.

3. Saving shouldn’t be limited to tough times

Saving money and concentrating on safe investments should always be a first priority. That priority shouldn’t waver or change amidst good times or bad. Tough times are the hardest time to save, actually. Think about it, if times are tough, you’re clearly strapped for cash. Save in the windfalls, booms, and busts. Again, to find the middle path amidst the excitement and tragedy, you need to calmly continue your savings.

4. Don’t trust market makers and commentators

Turn on CNBC and your brain will instantly accommodate talking heads’ suggestions. Their swanky ties, expensive suits, beautiful sets with technology galore, and impressive lifestyles can be captivating. I’ll be the first to admit that being able to eat at wonderful restaurants, travel the world in a jet, and drive a fast car sounds intriguing. But those market makers and commentators are selling a life that is temporary and not available to everyone. I will never own a jet or drive a Ferrari. Why would their advice and financial “expertise” help me? They live in a different category of human. Try to avoid their messages, as it can help you stay frugal.

5. Find a greater purpose/sacrifice to motivate modest lifestyles

Modest lifestyles can be challenging. It means eating out less, owning less, and looking for ways to invest and save every extra penny you have. But doing any of these things means bucking a system that encourages spending everywhere you go. Walk out the door and you’re bombarded by places to go, see, and spend. It’s easier to listen to these messages. To have a lasting, rationed budget or save more, you must find a higher purpose and reason to dig deep. Saying you get to live modestly through booms and busts isn’t enough. For me, I recognize that climate change is directly affected by my consumption behaviors. That changes my behavior. Additionally, I hold powerful regard for time to be peaceful, calm, and at rest. I value time over money.

We can leave the boom and bust cycle. We can protect ourselves and those around us, too. Create a rationed budget, and live it. Spend less than those around you. Save more than you thought you could. Don’t waiver as others panic or lavish themselves. Lastly, find a higher purpose that’ll motivate you when the going gets tough.

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What are my credentials?

Frugaling is a personal finance website where I regularly talk about financial concerns. I provide advice to save and make money, editorialize social justice issues, and argue in favor of minimalism over consumption.

But you might be wondering what credentials I have to proffer this help. Well, that’s a funny thing: I don’t have any. I didn’t get a business-related degree — there’s no formal finance education or economics indoctrination. My words are informed by something greater, and my hope is that they’re not the rote, memorized drivel that many financial advisors spout.

As a kid, I always thought I’d pursue something in finance. In fact, I want to tell you a little story from high school. It was there that I decided that to pursue a financial career path would leave me deeply unsatisfied, but my passion for personal finance never stopped.

Sam, you’re on the line!

I was giddy, but tempered in my high school science course. In about 10 minutes I’d ask my teacher to step outside and make a phone call.

My battery was fully charged, but I had to find a better signal. There was a field, away from the building, that provided a comfortable amount of strength. I dialed the number; I believe it was somewhere in New Jersey. I stayed on the line for what seemed like an abominable amount of time.

Occasionally, a pre-recorded voice piped up, that encouraged me to stay on the line. Then, I heard Jim Cramer’s — host of Mad Money on CNBC — voice and he shouted in my ear, “Sam from Golden, Colorado…” I melted with nervousness, but miraculously stated a ticker symbol (which I cannot remember) for a stock I was interested in.

Stocks were more important than classes

My latter high school days were filled with these moments. While fellow students studied diligently for their ACTs and applied to elite schools such as Duke and Stanford, my time was spent reading, trading, and watching the stock market. Because I was under 18, I forced my mom to co-sign and create a custodial account on an online trading site. I was hooked, and I loved the adrenaline.

Numbers pulsed through me, and I would binge on stock charts for hours. I hogged library computers and printer time to map them. In hallways and breaks, I drew lines on the charts, and practiced what I saw in books and television.

As an autodidact, the stock market provided an endless supply of data to be analyzed and understood. And the spoils went to the most educated people. I wanted to be one of them.

One form changed my degree, life

College was the path I was expected to follow. While my parents and grandparents never “forced” that path, it was strongly encouraged. The university life was where people went from good to great. I was open to that potential.

I applied to two colleges. The one I wanted to go to, Colorado State University, accepted me, but didn’t directly admit me into business. My less-than-stellar grades and contempt of mathematics meant that I would be an “open-option” business student until I proved my competence via good grades.

Prior to departing for Colorado State, there was an open house session. I attended one event geared specifically towards open-option students. For one hour, an advisor talked about academic success and finding your purpose in college.

I remember rolling my eyes, as the cynic in me dreaded the activity to come. We were split up into groups and then given about 10 minutes to complete a form and talk among the members.

The form asked us some simple questions, but one stuck out; it read, “How would you use your degree?” Despite the stupidly simple question, I had not really thought about this question before. I saw a response, “I want to help others.” Then I thought about my business degree — something wasn’t quite right.

I went to my advisor as soon as school started and asked to switch to psychology. There, I envisioned being able to listen and talk with others through their problems. That would be a degree to “help others.”

The psychology of money, spending, and society

After undergrad, I applied to graduate school and got into a counseling psychology doctoral program at the University of Iowa. I still wanted to follow the goals set forth in that open-option day. But in the back of my mind I recognized that investing and money issues still held great interest.

I still invested and read everything I could get my hands on regarding the stock market and business. I changed career paths, but my intrinsic passion for personal finance lingered.

As my own debt and spending spiralled out of control, I started Frugaling to right my course. It worked. I paid off about $40,000 of debt in about a year. I completely revamped my life — now incompatible with wanton spending and extravagances.

But I also started Frugaling as a perfect combination to meld my converging interests. I found that people’s (me included) monetary issues were closely linked to psychological concerns, distress, and stressors.

Psychology and business weren’t divergent topics. Additionally, I realized that most financial gurus blamed personal responsibility and character flaws on poverty, bankruptcy, and inadequate financial planning. There was room for a different voice — informed by psychological concepts and real counseling work with people suffering.

I’m not a financial-affiliated spokesperson

Over the nearly two years that Frugaling has been around, I have become an increasingly more passionate advocate for the underdogs. Financial markets are deeply unforgiving and unequal. People need to stand up and help others across diverse, multicultural backgrounds.

I ask you not to trust me for my financial degrees and letters after my name. I ask you not to trust me for how much money I’ve made for other people. I ask you not to trust me for being personally wealthy. I ask you not to trust me for my reputation (or lack thereof).

All I ask is that you consider the possibility that financial voices of reason come from those outside that insular world. I’m here to stand up for those who’ve been drowned out for too long. And I’m excited to continue building an audience (you included) that is inspired into action over social justice concerns and reducing consumption.

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New York Magazine Article on a “Whiz Kid”

At the spry young age of 15 and 16, I began trading stocks. I read Jim Cramer’s autobiography and was inspired by his love of markets. Memorizing the two, three, and four-letter tickers for major companies provided a unique joy; frankly, I’m not sure why. I loved watching CNBC and seeing the symbols dance up and down like a permanent Christmas tree of green and red.

Every now and then, a story would catch my eye. It was someone like me; passionate about the markets, but they were making boatloads of cash. They made me jealous, and I wondered how I could emulate their success.

That was until I realized most were fake, underreported, and often, downright lies. These were hardly the role models I should’ve been following. Today, I wanted to point out a few recent stories that highlighted frauds — willingly and with seriously piss-poor reporting.

The already-rich, “self-made” millionaire

Anton Ivanov was a serial entrepreneur and personal finance blogger for years. I had multiple conversations with him after starting Frugaling. To avoid anything slanderous, I’ll just say that I planned on never working with him. Something just didn’t make sense about his riches and efforts in the personal finance world.

Then, shortly before his 27th birthday a slew of stories were written about Ivanov. He even wrote an article for the occasion in one of my favorite personal finance sites, Budgets are Sexy. Yahoo Finance interviewed him to discover how he had succeeded to save, invest, and make wealth in record time.

Being a 27-year-old, self-made millionaire is a unique club that’s generally reserved for entrepreneurs and young tech whiz kids. The Internet has enabled a new generation — Millennials — to see millions and billions in record time with the sale of apps and sites.

Ivanov reported that he did it with old-fashioned hard work and dedication. Remarkable! His advice centered on a few steps: set clear and actionable goals, track net worth, save more income, avoid consumer debt, have an emergency fund, save for large expenses, and invest.

Yahoo Finance reported that Ivanov had successfully entered the workforce at a young age, started hustling at a young age, and then got into the real estate game. The article is filled with blasé quips like,

“He hopes to own at least 10 properties by the time he hits his 40s, but he’s in no rush.”

See, it’s not that his advice was fraudulent and questionable. The heart of the problem was that he wasn’t actually a “self-made” millionaire (as if anyone magically prints money themselves). Here’s what Yahoo Finance then wrote,

“Since the publication of this story on Nov. 4, new details have come to light which have made Anton Ivanov’s claims of becoming a self-made millionaire highly suspect. On Monday, Ivanov admitted to Yahoo Finance that 75-80% of his wealth consists of an inheritance that was left to him by his parents, who died several years ago.”

This kid made $72 million… From his parents

Ivanov isn’t the only fake “success story.” New York Magazine found a “whiz kid” that supposedly made millions trading stocks on his “lunch hour.” It was the ultimate viral article. With a catchy title that spoke to ridiculous riches — $72 million made from trading — and a young man looking to become a hedge fund manager.

Mo Islam was a 17-year-old kid who had already been profiled by Business Insider, as a “20 under 20.” He was going somewhere in life because of his vast wealth creation. Islam supposedly started buying penny stocks — over the counter and paper-based companies that don’t necessarily trade on the major exchanges. These stocks vary greatly and are dangerous for 99.99% of investors to even think about.

The penny stocks didn’t pan out, so Islam swiftly switched to oil and gold. That’s when New York Magazine says he struck bank account success. He quickly amassed about 8-figures of wealth.

If the story is unbelievable and astonishing, it might just be unreal and manufactured. Only a couple days later, every major media outlet was discrediting the kid and New York Magazine’s story. It was all made up, and while the “whiz kid” did have a large bank account, it is because very wealthy parents.

The media is rewarded for good, fake stories

Over and over again, false stories are reported in the media. They used to make me envious for their success. I thought, “Wow! If they can do it, why can’t I?” Well, there was an essential distinction between them and me — lots and lots of money to start. Both Ivanov and Islam started with wealth that was either inherited or given to them. The trading, saving, and investing that came afterwards didn’t essentially make them rich — it just added to their earnings.

These weren’t the mythical “self-made millionaire” and “whiz kids.” No, they were privileged with familial riches. Today I’m writing this story, not to further discredit these two people, but to highlight the severe media mismanagement and horrific reporting that was associated with both stories (and many others I don’t have time to cover).

With each story, the media outlet claimed that the individual told them that he had made boatloads of money. With each story, they reported that claim without properly vetting the source. And with each story, the media outlets made vast advertising dollars in spite of their errs. In fact, they made even more than they would’ve if they honestly vetted and reported the stories!

Ordinarily, these people are singular stories — one-hit wonders. They’re popular for a little while and then the media company moves to the next story. They make money from that one story, but here’s the genius: if they get it wrong, there’s at least two stories to come!

Here’s how you make more money as a news company by reporting fraudulent stories:

Receive harsh critique and censure from observers of the story, which sends a surge to the original article

Make moremoney from visitors to the “incredible,” fraudulent story

Publish a story highlighting the “truth” regarding the “self-made millionaire”

Make even more money from visitors to the “incredible truth” about the fraudulent story

All the while, media outlets work diligently to discredit the source, while excusing the journalist’s poor reporting. And meanwhile the mythical narrative of the “self-made millionaire” continues, stubbornly. The narrative doesn’t change, despite the blow to accuracy. Everybody wins when the narrative stays the same, right?

What do you think, can people actually be “self-made” millionaires? What’s the best way to make and build wealth? Is there actually one-size-fits-all advice that works for everyone?